Fed to buy up to $300B long-term Treasury bonds

AP via Yahoo News ^ | March 18, 2009 | Jeannine Aversa

[org.whodat]

That is what it is, printing money, making inflation to buy of debt.http://www.youtube.com/watch?v=9jDleaINJKU

[TenthAmendmentChampion]

The Federal Reserve (which is allowed to make money out of thin air, or destroy that same money) decided to create a new $300 billion dollars and use that to buy up debt from the Treasury. It may be related to the recent story about China backing away from buying Treasuries at the same furious pace they had been buying them.

It’s not clear what will happen when the economy turns around and Treasuries aren’t as attractive. It’s likely interest rates will have to go up.

I read a comment at Market Watch that the Chinese are buying short term notes hoping that the next set of bonds will pay higher interest rates and they won’t be on the hook for years. Heaven help us if they redeem their bonds and don’t buy new ones!

[GourmetDan]

"What is meant by: ***WASHINGTON (AP) — The Federal Reserve announced Wednesday it will spend up to $300 billion over the next six months to buy long-term government bonds...***?"

It means that the Federal Reserve (a private bank neither 'federal' nor with any 'reserves') makes an accounting entry on it's books to 'create' cash and equity (a big no-no if you or I tried it). The Fed then uses this 'cash' to buy U.S. Treasury Notes (backed by taxes payable by you and me) and collects both interest and principal on money it 'created' out of thin air.

Also see 'debt monetization' on Wiki.

Welcome to the United States of Zimbabwe.

[CRBDeuce]

That’s an outrage! Can we talk about this instead of AIG?

Can we talk about $180 BILLION AiG instead of beating on 73 employees who happened to get retention bonuses of $165 million as incentive to hang in there while the beatings continue! Heh, but your point is spot on....the 'journalist' who 'keyed' on the 300 instead of the real news was definitely math challenged.

[RobRoy]

Yep. it has been said that this thing would be deflation followed by inflation, followed by hyper-inflation. Well, this move begins the “inflation”phase.

[Mr Rogers]

I’m no economist. Where does this 300B come from?

[Ghost of Philip Marlowe]

If you want to be more rattled, go read the comments on marketwatch. I posted the correct link in my #19.
Scary stuff. Stock up on canned goods.

[Publius]

[Ghost of Philip Marlowe]

Oh, I got your joke.

But this printed money is about as ‘valuable’ as that piece of cardboard. But, of course, the Feds can issue a piece of cardboard at 75% interest. That was my addition to the joke :)

[WhistlingPastTheGraveyard]

*ping*

[444Flyer]

So....just tell me when they are planning on stealing our 401ks and IRAs to help float the Treasury debt. Oh don't worry, they'll pay us back eventually, interest included. (And if you believe that I have some swampland in Chicago to sell you.)

[VirginiaMom]

***

[kc8ukw]

Is that photoshopped, or a real photograph? I could imagine that maybe right after 9/11 some poor gas shop owner freaked out and did that.

[Publius]

Photoshop. One of my very favorite photoshopped pictures.

[mojitojoe]

This move is a dead giveaway. The Chinese have reduced the limit on America’s credit card and the Fed is stepping up to the plate to prevent the roof from caving in. We are at the edge of the abyss.

[444Flyer]

Ping

[happydogx2]

After market report on CNBC rates are headed for “low 4’s”

[politicket]

Ping

Thanks for the ping! You can see my comments about this move here:

http://www.freerepublic.com/focus/f-news/2209291/posts

[Ghost of Philip Marlowe]

No, it's like shooting dice with your wife and instead of paying her when you lose, you take out a 20-year loan at 75% interest and then make your children pay.

[444Flyer]

Thanks